Both the residential and commercial markets had a strong showing in 3Q 2024 in Dubai, though the former was slightly weaker in Abu Dhabi during the quarter, according to CBRE Middle East’s UAE Real Estate Market Review 3Q 2024 (pdf).

COMMERCIAL MARKET-

Dubai’s office market benefited from growing commercial lease activity on the back of non-oil growth, with occupancy rates hitting 93% at the end of 3Q 2024, up from 92% in 3Q 2023. Grade A rents rose 11% y-o-y, while Grade B rents were up 21%, and Grade C climbed 19%.

Office rents will not let up anytime soon: Landlords are still in control due to limited office space, which is expected to push rents higher into 2025.

Abu Dhabi saw occupancy rates for institutional-grade spaces reaching 94% at the end of 3Q 2024, up from 91% in 3Q 2023. Prime assets saw an 18% y-o-y spike in rentals, Grade A grew 6%, and Grade B increased 12%.

Grade A space is expected to remain limited for at least another few years while Aldar works to deliver several new projects in 2027, including its JV with Mubadala on Maryah Island and Yas Business Park.

THE RESIDENTIAL MARKET-

Dubai’s residential sales hit AED 120 bn in 3Q, up 30% y-o-y, according to CBRE. Prices for apartments rose 19%, while villa prices jumped 23%. On the rental side, apartment rents increased 19% and villa rents rose 13%. Over the first nine months of 2024, residential transactions expanded 36% y-o-y, exceeding 125k transactions.

The market “is set to remain positive in the coming quarters for both sales and rentals,” with some price correction expected as new supply is delivered.

Meanwhile, Abu Dhabi saw a 40% slump in transactions during the quarter due to a decline in off-plan sales, with just 2k transactions in total, but apartment prices rose 9% y-o-y and villa prices increased 8% y-o-y.

The emirate’s rental market dipped in total registrations, despite new contracts growing 2% y-o-y as tenants looked to newly completed projects over older stock. Average apartment rents climbed 9% y-o-y, while average villa rents were up 4% y-o-y during the quarter. In 9M 2024, total residential transactions fell 16% y-o-y to 7k, due to a 35% decline in off-plan sales despite a 43% surge in ready market sales.

RETAIL AND INDUSTRIAL MARKETS-

Dubai’s retail market remains tight, with prime properties almost fully occupied and rents averaging AED 500 per sq-ft, up 3% y-o-y. Meanwhile, Abu Dhabi’s major malls are witnessing “increasing tenant demand and limited vacancy,” with average rates rising 8% y-o-y.

Limited industrial real estate is still hampering the market, “creating a challenging environment for corporate occupiers, particularly on new lease negotiations,” CBRE said. Dubai’s industrial registrations grew 5% y-o-y in 3Q 2024, with new leases growing 4% and renewals increasing 6% y-o-y. Meanwhile in Abu Dhabi, new registrations grew 6% y-o-y.

Tags: